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Presuming President Trump signs it into law, the omnibus package of coronavirus relief and Fiscal Year 2021 (FY21) appropriations includes important wins for the insights industry: (1) funding for the census; (2) the extension and expansion of forgivable loans for small businesses; and (3) the extension of the payroll retention tax credit.

The House passed H.R. 133 by a 359 - 53 vote and the Senate passed it 92 - 6. President Trump is expected to sign it into law shortly, but his recent stated demand for more direct payments means we don’t know if/when he really will do so.

To the Insights Association's great regret, the package does not include the liability limitations we have sought for COVID-19-related exposure, nor the extension of census reporting deadlines.

UPDATE: President Trump finally signed H.R. 133 into law on December 27, 2020.

(1) Census funding finalized

The legislation authorizes more than $1.6 billion in FY21 spending on the Census Bureau -- $1.1+ billion in funding for the Census Bureau in direct appropriations, plus carryover funding from FY20. More than $934 million of that would be dedicated to continued 2020 Census activities.

The total funding amount (which includes the two insights industry priorities of the 2020 Census and the ongoing American Community Survey (ACS)) is not too far off from the President’s FY21 Budget (nearly $1.672 billion), the Insights Association’s budget request (just over $1.681 billion, made in committee testimony and in a coalition letter), and the House-passed FY21 CJS bill (also just over $1.681 billion), but a fair bit less than the Senate-proposed amount (nearly $1.8 billion).

Unfortunately, the package does not extend the reporting deadlines for the 2020 Census, for which the Insights Association and our Census Project coalition allies are still advocating, in order to give the Census Bureau the time it needs to review, process and analyze 2020 Census data before finalizing it for apportionment and redistricting (and other uses, like statistical sampling in marketing research and data analytics).

(2) Small business loan programs extended and expanded

The legislation revives the Paycheck Protection Program (PPP) forgivable small business loans, expands certain eligible expenses, and allows businesses a second draw. The PPP loan programs are extended until March 31, 2021. H.R. 133 also extends and simplifies various aspects of small business loan programs that may be of interest.

Further, the legislation countermands prior guidance from the IRS by allowing PPP borrowers to deduct eligible expenses paid for with forgiven PPP loans.

Implementing regulations would be due from the Small Business Administration (SBA) within 10 days of this legislation being signed into law, but exactly when the PPP will again be ‘open for business’ is not yet clear.

More allowable/forgivable expenses: H.R. 133 expands the categories of business expenses that are allowable and forgivable by Paycheck Protection Program loans (in the past and in the future, “except for borrowers who have already had their loans forgiven”):

• Operations expenditures: “Payment for any software, cloud computing, and other human resources and accounting needs.”
• Property damage costs: “Costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance.”
• Supplier costs: “Expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made. Supplier costs of perishable goods can be made before or during the life of the loan.”
• Worker protection expenditures: “Personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines or any equivalent State and local guidance related to COVID-19 during the period between March 1, 2020, and the end of the national emergency declaration.”

Employer-provided group insurance benefits are also now included in payroll costs for PPP purposes, including group life, disability, vision, or dental insurance.

PPP borrowers now can choose a covered period ending at the point of the borrower’s choosing between 8 and 24 weeks after origination of the loan.

Simplified PPP applications: H.R. 133 creates “a simplified application process for loans under $150,000 such that” the “borrower shall receive forgiveness if a borrower signs and submits to the lender a certification that is not more than one page in length, includes a description of the number of employees the borrower was able to retain because of the covered loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount. The borrower must also attest that the borrower accurately provided the required certification and complied with Paycheck Protection Program loan requirements. The SBA must establish this form within 24 days of enactment and may not require additional materials unless necessary to substantiate revenue loss requirements or satisfy relevant statutory or regulatory requirements. Additionally, borrowers are required to retain relevant records related to employment for four years and other records for three years. The Administrator may review and audit these loans to ensure against fraud.”

This “applies to loans made before, on, or after the date of enactment, including the forgiveness of the loan.”

The simplified application helps deal with some of the problems in SBA recently demanding more information for the forgivable loans.

PPP Second Draw loans: The package includes the establishment of “PPP second draw” loans “for smaller and harder-hit businesses, with a maximum amount of $2 million.”

Eligible entities: Employ not more than 300 employees; Have used or will use the full amount of their first PPP; Demonstrate at least a 25 percent reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter (Applications submitted on or after January 1, 2021 are eligible to utilize the gross receipts from the fourth quarter of 2020); and Include businesses, some nonprofits, housing cooperatives, veterans’ organizations, tribal businesses, self-employed individuals, sole proprietors, independent contractors, and small agricultural co-operatives.

Borrowers may receive a loan amount of up to 2.5X their average monthly payroll costs in the one year prior to the loan or the calendar year. No loan can be greater than $2 million. (New entities may receive loans of up to 2.5X the sum of their average monthly payroll costs.) Businesses with multiple locations that are eligible entities under the initial PPP requirements may employ not more than 300 employees per physical location.

Any waiver of affiliation rules that applied during initial PPP loans apply to a second loan (but the affiliation rules that IA sought to ease for equity-funded small businesses still apply as before).

An eligible entity may only receive one PPP second draw loan.

Loan fees are waived (for both borrowers and lenders).

For loans of $150,000 or less, the entity may submit a certification attesting that the entity meets the revenue loss requirements on or before the date the entity submits their loan forgiveness application and non-profit and veterans organizations may utilize gross receipts to calculate their revenue loss standard.

Borrowers would be eligible for second draw loan forgiveness equal to the sum of their payroll costs, as well as covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period. The 60/40 cost allocation between payroll and nonpayroll costs in order to receive full forgiveness still applies.

PPP borrowers may request increased loan amounts: The SBA must “release guidance to lenders within 17 days of enactment that allows borrowers who returned all or part of their PPP loan to reapply for the maximum amount applicable so long that they have not received forgiveness. Additionally, this section allows borrowers whose loan calculations have increased due to changes in interim final rules to work with lenders to modify their loan value regardless of whether the loan has been fully disbursed, or if Form 1502 has already been submitted.”

Emergency Impact Disaster Loan (EIDL) grants:

• The EIDL grant program is extended through December 31, 2021.
• PPP borrowers now no longer have to deduct the amount of their EIDL advance from their PPP forgiveness amount, and SBA is tasked with issuing rules to ensure borrowers are made whole if they received forgiveness and their EIDL was deducted from that amount.

Documentation requirements eased for sole proprietors and the self-employed: H.R. 133 allows more flexibility for CBA to accept documentation beyond those enumerated in the CARES Act to determine loan eligibility for sole proprietors and the self-employed.

(3) Extension of the employee retention tax credit

The CARES Act in the spring included an employee retention credit for 50% of eligible employee wages and health benefits, capped at $10,000 per employee for 2020. H.R. 133 extends this tax credit through July 1, 2021. The credit will cover 70 percent of compensation, with a maximum of $10,000 per calendar quarter.

The CARES Act version of the credit applied to employers with more than 100 full-time employees in 2019 so they could receive credit for wages paid to workers while they aren’t providing services because of government-mandated COVID-19 shutdowns. H.R. 133 raises the threshold to 500 or fewer workers.

Also: Companies that weren’t in existence for all or part of 2019 are now eligible to claim the tax credit; Companies would now be eligible if their revenue declined by 20 percent compared to the same calendar quarter of the year prior; and Companies receiving PPP loans would qualify for the credit for any wage that are not covered by forgivable loans.

Looking ahead to 2021

IA will share further information as it becomes available in 2021 on the renewed/expanded PPP program and other provisions, and continue to advocate to extend the 2020 Census reporting deadlines. For now, IA members should take heart in a few more advocacy wins to end 2020.

This information is not intended and should not be construed as or substituted for legal advice. It is provided for informational purposes only. It is advisable to consult with private counsel on the precise scope and interpretation of any laws/regulation/legislation and their impact on your particular business.